Tax reform is coming very soon and can affect you.
In case you missed it, we touched on what this could mean on last week's show.
Any fans of the Rocky movies out there? Remember how before the fights there was all this boasting, yelling, and a lot of hype? None of it meant anything until they got in the ring.
That's a little bit like what's been happening between the Senate and the House, Democrats and Republicans. There's been a lot of hype, a lot of tweeting, but now we get to see what's actually going to happen.
There are two things that could happen:
- Massive amounts of programs from the government are cut. This means programs such as social security, welfare, medicare, medicaid.
- 401K contributions could be cut. The government loses a lot of revenue through 401Ks each year. When you put money in your 401K, it's PRE-TAX. That means the government doesn't get paid from that immediately. They get paid long-term, when you take the money out. So now, they're thinking of cutting the amount of pre-tax savings you're allowed to do. We're talking from $18,500 to $2,000 (rumored).
There will be changes legislatively and life changes. Is your plan built to handle change?
If your plan can't handle change, then your plan isn't built well.
Let's look at an example.
Say you're saving for long-term care. The average cost is up to $8,000 a year now. The cost of long-term care continues to sky-rocket! Suppose you start investing into long-term care insurance. You continue to pay into it, but eventually the government takes over and says it's just part of general medicare coverage now for anyone in retirement age. You just wasted all that money! I looked at this example with a client recently. Our solution? We decided to purchase a life insurance policy that contained long-term care benefits. This is a huge advantage because it's, you guessed it, flexible.
Your plan needs to be a living, breathing document that changes over time. If you don't feel like your plan is where it should be, I'd love to meet with you for a free consultation and see where we can improve.
Listen to The Full Show:
Listen in for tips on how you can prepare for the impending tax reform. Plus, what you should be looking for in a financial planner. (Listen in at 7:42).
"There will be changes legislatively and other changes that come along throughout your life. Is your plan built to handle change?"
"We're about to see whether tax reform can be passed. If it is, it can be the most remarkable change to the tax system in 30 years."